Italy's government views favourably UniCredit's efforts to build a large European banking group through a merger with Germany's Commerzbank as long as the Milanese bank keeps its central functions in Italy, sources close to the matter said.
Italy's Treasury declined to comment, while UniCredit was not available for comment.
UniCredit has emerged as the single largest private investor in Commerzbank after spending €1.5 billion to buy 9% of the German rival.
Italy's second-biggest bank will seek supervisory approval to potentially acquire up to 30% of Commerzbank, sources told Reuters this week, as it said it would explore a possible merger among other "value creating opportunities".
Rome's government has so far kept its distance from the move.
Speaking on condition of anonymity because the matter is sensitive, the sources told Reuters the government was not against UniCredit's move provided it did not entail a shift of central functions to Germany were a merger to take place.
Other people added Rome in general regarded Orcel's moves with caution as relations have been strained since UniCredit walked away from buying domestic rival Monte dei Paschi di Siena at the eleventh hour in 2021, forcing the government to seek more time from the EU to return the bank to private investors.
UniCredit in 2005 bought Bavarian bank HVB. Albeit smaller in size than Commerzbank's, UniCredit's German business is more efficient and more profitable, providing scope for cost savings and a profit boost were the two entities to combine.
A previous attempt by former UniCredit CEO Jean Pierre Mustier to move on Commerzbank met with political opposition in Italy due to plans to create a German holding company to lead the bank's business.
Italian politicians have traditionally looked with concern at cross-border mergers of their lenders due to the role they play in helping the Treasury to refinance the country's nearly €3 trillion public debt.
Conversely, Italy's debt running at around 140% of gross domestic product has long raised worries in Germany.
European bankers have long complained that politics and regulation hindered cross-border mergers, leaving the bloc's lenders to trail far behind their US rivals in terms of size and market value.
